Oil briefly flashed a warning signal that shows traders are worrying about oversupply

Reuters

• Oil markets went into contango Tuesday, indicating fear of oversupply, Bloomberg previously reported.
• Coronavirus, and increasing signs that OPEC may not cut production in response to it, has sent oil spiraling down recently.
• Still, brent crude bounced as much as 2.37% Tuesday.
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Oil markets flashed a signal late Monday that oversupply is top of mind.

The Brent crude futures curve momentarily entered full contango, in which each later dated future contract is less expensive than the the one before it, Bloomberg first reported. That's the reverse of the way the futures curve normally sits - and it's historically signaled excess supply.

Monday's contango comes amid fear around the impact coronavirus will have on China's growth and therefore oil demand. China is the single largest importer of oil in the world.

In addition, OPEC+'s willingness to support prices hangs in doubt, Bloomberg reported. OPEC+ delegates met last week to discuss production cuts in light of coronavirus. But those talks have stalled as key OPEC allies have signaled resistance.

The global benchmark bounced up as much as 2.37% Tuesday, though the inter-day high of $54.53 per barrel remained just over a dollar more than the 52-week low of $53.11 per barrel.

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